KARACHI: The country’s public debt has recorded a sharp increase costing heavily to the national kitty as debt servicing surged with widening fiscal deficit thus minimising the government’s ability get higher fund for development.

“Total public-debt-to-GDP ratio further increased and recorded at 74.2 per cent of GDP at end March 2019,” said the Economic Survey 2018-19 issued on Monday. The public debt as percentage of GDP was 72.1pc by end June 2018.

The interest payments on public debt during the first nine months of 2018-19 were the highest during the last three years. The survey noted that interest payments consumed 41pc of revenue during first nine months of current fiscal year compared with 33pc during the same period last year.

The government document noted that this increase in interest payment is attributed to tight monetary policy stance coupled with higher share of short term domestic debt while revenue collection remained lower compared with last fiscal year.

The survey highlighted the increased indebtedness and weak debt affordability of the government. Total public debt as percentage of revenue stood at 477pc in FY18 while it was 434pc in FY17. No data was provided for 9 months of this fiscal.

It was also revealed that the public debt servicing was recorded at Rs1975bn during first nine months of current fiscal year against the annual budgeted estimate of Rs2396bn.

“Domestic interest payments constituted around 65pc of total debt servicing due to higher volume of domestic debt,” said the government paper.

In terms of amount, the government paid Rs1,277bn during the first 9 months of the current fiscal as domestic interest payments. However it said that higher interest payments were primarily driven by payments made against Market Related Treasury Bills (Rs299bn), Treasury Bills (Rs290bn), National Savings Schemes (Rs272bn) and Pakistan Investment Bonds (Rs268bn).

Published in Dawn, June 11th, 2019